Several Florida legislators say they want changes to a state-approved program meant to help homeowners finance energy efficient upgrades.
Their assessment follows Tampa Bay Times investigation that found the program often traps homeowners in debt they weren’t expecting and threatens their ability to hold on to their homes.
“It’s pretty clear that the predatory behavior and the lack of oversight of the program itself is putting folks in almost a micro example of a housing bubble,” said Rep. Anna Eskamani, D-Orlando.
One of the issues the Times' investigation found is that customers often don’t understand that the PACE loans are tied to their property taxes and that their annual bill will spike. Many weren’t familiar with the basic terms of the loans.
Four legislators who spoke to the the Times said making sure PACE customers understand what they are getting into should be top of mind when it comes to reform.
“My goal would be to get to a point where the consumer knows exactly the following things,” said Sen. Ed Hooper, R-Clearwater. “What is my tax bill going to be? What is the percentage rate of the loan going to cost me? And how long is it going (to take) for me to pay it back?”
Hooper proposed one of a pair of bills last session that would have added consumer protections such as those to the state’s PACE statute. Neither bill gained traction.
The other bill came from Ardian Zika, R-Land O' Lakes. It would have added a number of consumer protections, among them a requirement to check a potential customer’s ability to repay the loan. Under current state law, neither contractors nor PACE lenders are required to ensure a customer can afford the loan before they issue it.
“The way I view it is any product that has a strong consumer protection to it is a strong product,” he said. “And the PACE product definitely needs consumer protections in place.”
His bill also would have addressed a concern Sen. Jeff Brandes, R-St. Petersburg, raised in an interview with the Times — who is paid first if a home with a PACE loan forecloses.
Typically during foreclosure, banks are first in line to be paid for any outstanding mortgage balance on the home. But under state law, PACE loans leapfrog banks to get the first pass at funds from a foreclosure sale.
“That’s probably something that needs to be addressed,” Brandes said.
Orlando’s Eskamani was also concerned that language barriers might prevent some customers from understanding the loans. Lawyers and consumer advocates the Times spoke with for its investigation said that non-English speaking residents can be targeted by contractors who perform the work.
Citing the Times investigation, Eskamani recently returned a $1,000 donation that Ygrene Energy Fund, the state’s largest PACE lender, gave her campaign in 2019. Ygrene declined to comment on the refund.
In a statement, the company said that feedback from the “vast majority” of its PACE customers indicates they are “overwhelmingly satisfied with the program.”
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“That said, Ygrene has developed and continues to improve consumer protection policies far stronger than those in Florida statute and local regulations,” the company said.
Ygrene said it is committed to working on program improvements, and said it is working to address more consumer protections, affordability and “complaint resolution.”
Renew Financial, another large PACE provider in the state, said the industry’s consumer protection practices “go above and beyond what other financing alternatives offer" and said it reviews “multiple factors” to determine a homeowner’s eligibility.
“That said, we actively seek to go further to maintain our high level of satisfaction,” Renew said in a statement, noting that its website outlines its current consumer protections.
While the legislators said it’s too early to know whether they will propose bills related to PACE, Ygrene Energy Fund may draft legislation of its own.
Pasco County Tax Collector Mike Fasano, who implemented his own consumer protections for PACE loans in his county, said Ygrene representatives requested to meet with him following the Times' investigation. They expressed interest in introducing greater oversight of contractors who perform the work and making sure customers can afford the PACE loan they sign up for.
Legislation of any kind for PACE, Fasano said, “has to be something that is going to help the little guy and gal out.”
Ygrene declined to comment on specifics of potential legislation.
“We are currently in research and listening mode with nothing specific to share at this time,” the statement said.